Posted 12/30/2023, 1:38:55 AM
Pakistan Misses Growth and Inflation Targets Amid Political Uncertainty and Policy Tightening
- Political uncertainty weighed on business and consumer confidence, contracting real GDP by 0.2% in FY23
- Budgetary targets for fiscal and primary balances were missed amid lower than expected tax revenue and subsidies
- SBP maintained a contractionary policy, raising policy rate by 825 basis points in FY23 to contain demand and imports
- Average inflation surged to 29.2% in FY23, driven by global commodity prices and exchange rate depreciation
- SBP projects inflation moderating to 20-22% in FY24 due to contractionary policy, supply improvements, and base effects
